RBI to compensate banks for loss in N-E service

Shillong, March 23: Having prioritised to provide banking services to the people of North-East, the Reserve Bank of India had decided to compensate commercial banks for revenue loss in the process, RBI officials said today. “RBI will compensate 100 per cent revenue loss to banks for five years as an incentive to push banking inclusion in the region,” the Deputy General Manger of RBI, Mr T. Jamang, told PTI here on the sideline of an annual payment conference of RBI here............

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RBI to monitor banks' global books; SBI, ICICI, BoB among banks to face scrutiny

The Reserve Bank of India will send its officials to thoroughly inspect the fast growing overseas operations of Indian banks as they do for the local business to ensure that events outside the nation do not rock the domestic business…………………….

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RBI policy depends on new CPI, realty data

Hong Kong: The Reserve Bank of India (RBI) will watch the newly introduced consumer price index as well as property sector data for determining its stance on interest rates, a deputy governor of the RBI said on Friday. Speaking at an investor conference in Hong Kong, Subir Gokarn also said a low fiscal deficit would help in bringing down interest rates and boosting investments.  

Firstpost

Standard ratio

This refers to the RBI's directions to gold loan companies capping the loan-to-value ratio (LTV) for lending against gold at 60 per cent. The directions will not put the gold loan companies on a level playing ground with the commercial banks, in respect of which the RBI has not issued any directions for downsizing LTV, and whose cost of funds is much cheaper. While the imperative to contain concentration risk is understandable, it would be in the best interests of the sector if the RBI brought in standard LTV for all gold lenders, including commercial banks.

- Vijay Nair Trivandrum (HBL)

Higher interest rates may hit Rs 33k crore rural projects: Nabard

........ Nabard sanctions and releases funds to state governments for building rural roads, bridges, cold storages and irrigation facilities under the Rural Infrastructure Development Fund (RIDF) scheme. Many state governments feel the RBI diktat is going to violate the loan agreement between the two parties. Nabard chairman Prakash Bakshi said he has written to both the government and RBI inviting their attention to this aspect………

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‘Time for RBI to cut interest rates’

The government expects inflation to stay around 6.5%-7% next year despite the possibility of an increase in oil prices. In an interview, economic secretary R Gopalan told TOI that it may be a good time for the Reserve Bank of India (RBI) to start cutting rates and do its bit in helping boost investment. Excerpts:……………

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Indian bank loans up 16.3 per cent y/y as on March 9, says RBI

Indian bank loans rose 16.3 percent from a year earlier as of two weeks to March 9, while deposits were up 13.8 percent, the Reserve Bank of India's weekly statistical supplement showed…………….

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Moving to loosen monetary policy: RBI

Hong Kong: The deputy governor of India's central bank said Friday the bank is moving toward a looser monetary policy, though the timing of any easing will depend on the state of the nation's economy………

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Rolling back rate cut expectations

...In this season of roll-backs, it’s interesting to see how quickly estimates for interest rate cuts next year are being rolled back. A few months ago economists were pencilling in cuts of 100-125 basis points, with some convinced the repo rate would hit 7% by March next year from the current 8.5%. But those calculations have been upset and, right now, no one’s willing to wager more than a 75 basis points pruning of the key policy rate with a few less hopeful: the Reserve Bank of India (RBI), they say, won’t be in a position to pare it by more than 50 basis points......................

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‘Identifying NPA will be key issue for CAs'

Kochi, March 23: Dr V. A. Joesph, Managing Director and CEO, South Indian Bank, inaugurated a seminar on bank audit, organised by ICAI, Ernakulam branch, here on Friday. Speaking on the occasion, he said a steady increase in rates of interest on deposits and advances during the year may see an increase in NPAs. Hence, identifying NPAs will be a key issue for chartered accountants undertaking statutory audit this year, he said. Dr Joseph also applauded the efforts of ICAI in convincing RBI to fix the criteria for audit of public sector banks branches having advances of Rs 6 crore and above. He also said the presence of auditors will bring in more professionalism in banks. 

HBL

Concept of inflation often misunderstood, says KC Chakrabarty

"...in the banking world, the concept of inflation is often misunderstood by people," Chakrabarty said at a lecture on Tuesday at Banaras Hindu University. "You would often hear this refrain from many persons that despite RBI claiming that inflation has come down in the recent past, the prices have not come down,"…….

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Rate outlook muted on inflation fears

......Core inflation has started falling and the budget arithmetic on how the government will manage its deficit seems credible, both of which will be important triggers for the RBI to start easing the rates when it unveils its annual policy on April 17.......

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Gold lenders lose shine on RBI curbs

Gold loan firms were hit badly after the Reserve Bank of India (RBI) curbed mindless lending by non-banking finance companies (NBFCs) against gold........................

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SBSA flays RBI decision on business correspondents

.......The SBSA leader alleged that the RBI decision was a superfluous step which would lead to incorrigible frauds in the banking sector, besides inviting unhealthy competition among bankers. If the business correspondents were allowed to tie up with more than one bank, there would be laxity at all levels, he added........

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India’s adviser favours no intervention in forex market now

The Reserve Bank of India need not intervene in the forex market as of now to prop up a weakening rupee, the chief economic adviser in the finance ministry said on Friday. The partially convertible rupee ended at 51.17/18 to the dollar on Thursday, after touching the day’s low of 51.28, a level not seen since 16 January. The unit had closed at 50.66/67 on Wednesday. “This is not that place where I would recommend intervention,” Kaushik Basu said……

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End of the road for SUUTI, new AMC to hold all assets

……..Also, the Reserve Bank of India (RBI) had previously rejected the proposal to reduce margin requirement from the existing limit of 50 per cent. This would imply that half the assets of the new AMC would have to be kept free, which may cut loans to roughly Rs 15,000 crore. The ministry has since reportedly been in consultation with the RBI to relax rules regarding margins and interest rates. It is not clear if the central bank has agreed to any of these proposals………

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Financial services to be kept out of SAFTA talks: Government

The government has decided to exclude financial services from the SAARC agreement on trade in services, following strong objection from the Reserve Bank of India, or RBI. The central bank has argued that India has already allowed access to foreign banks under the World Trade Organization agreement…………..

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Foreign exchange reserves grow to $294.82 bn

India's foreign exchange reserves grew by $862 million to $294.82 billion on the back of a rise in the core foreign currency assets (FCAs) for the week ended March 16, the Reserve Bank of India said in a release……………..

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Financial inclusion needs version 2.0 : Puneet Chopra

The rapid expansion of business correspondents does not mask the cracks in the scheme

……One of the fundamental shifts needed by banks is to recognise and support BCs as a legitimate and full-service channel — an addition to branches, ATMs, kiosks, mobile and Internet channels. This would certainly be a winning proposition for all. All marginal customers can get doorstep (and perhaps superior) services; banks can decongest their branches, and focus on high net worth customers; while BCs would have a healthier business case. Bradesco Bank and Caixa Econômica Federal in Brazil (which, like India, follows a bank-led agent model) have adopted this approach with a great degree of success. Providing a balanced mix of financial products is another critical step needing to be taken and rapidly so……..

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Microfinance programme now has an economy-wide impact

….The paper finds that the typical microfinance programme, when made widely available, can have significant aggregate and distributional impacts, and that the general equilibrium (GE) effects through wages and interest rates are quantitatively important…….

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